IMS: Pace of outsourcing accelerating

Drugmakers are pulling out of manufacturing at an unprecedented rate, according to a new report from IMS Health. Four of the top 10 pharma players announced big new outsourcing programs last year. That's evidence that pharma execs are thinking in vastly different ways from their predecessors, who believed R&D and manufacturing had to work hand-in-glove, and that the skills required to make drugs couldn't be found in emerging markets.

This shift toward contract manufacturing has risks, IMS concludes. First, there are safety concerns. Just think of Baxter's heparin supplier Scientific Protein, which made crude heparin in partnership with a Chinese manufacturer whose plant was riddled with problems when the FDA finally inspected it after millions of doses of the blood thinner had to be recalled. Then there's Sanofi-Aventis, whose contract manufacturer went bankrupt, leaving Sanofi to deal with its manufacturing breaches. Secondly, in other industries, contract manufacturers have found ways to enter the market as competitors. Finally, there's economic implications of shipping work to emerging markets. Europe, for instance, counts 640,000 pharma jobs. If they are perceived to be under threat from outsourcing, politicians might intervene.

- read the story at Outsourcing Pharma

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